Acc/400 Week 1 Financial Analysis
Assignments from the Readings
October 17, 2011
ACC/400
University of Phoenix
John R. Triplett
Team B: Assignment from the Readings Ch. 11: Interpreting Financial Statements BYP11-4
BYP11-4 Marriott Corporation split into two companies: Host Marriott Corporation and Marriott International. Host Marriott retained ownership of the corporation’s vast hotel and other properties, while Marriott International, rather than owning hotels, managed them. The purpose of this split was to free Marriott International from the “baggage” associated with Host Marriott, thus allowing it to be more aggressive in its pursuit of growth. The following information (in millions) is provided for each corporation for their first full year operating as independent …show more content…
(b) Calculate the debt to total assets ratio for each company.
Debt to total assets ratio:
Host Marriott – ($3,112 /$3,822) = 1.23%
Marriott International – ($2,440 / $3,207) = 1.31%
(c) Calculate the return on assets and return on common stockholders’ equity ratios for each company.
Return on Assets: Host Marriott – (25)/3822= .0065
Marriott Intl – 200/3207= .0624
(d) The company’s debt holders were fiercely opposed to the original plan to split the two companies because the original plan had Host Marriott absorbing the majority of the company’s debt. They relented only when Marriott International agreed to absorb a larger share of the debt. Discuss the possible reasons the debt holders were opposed to the plan to split the company.
The debt holders were more than likely opposed the splitting of the company because they would not make a profit and would run the risk of being stuck with all of the debt. The debt holders felt the split was unfair since the debt resulted from business done as one company. In order to afford both companies a fair opportunity for success it’s only fair to assign a fair amount of debt between each
October 17, 2011
ACC/400
University of Phoenix
John R. Triplett
Team B: Assignment from the Readings Ch. 11: Interpreting Financial Statements BYP11-4
BYP11-4 Marriott Corporation split into two companies: Host Marriott Corporation and Marriott International. Host Marriott retained ownership of the corporation’s vast hotel and other properties, while Marriott International, rather than owning hotels, managed them. The purpose of this split was to free Marriott International from the “baggage” associated with Host Marriott, thus allowing it to be more aggressive in its pursuit of growth. The following information (in millions) is provided for each corporation for their first full year operating as independent …show more content…
(b) Calculate the debt to total assets ratio for each company.
Debt to total assets ratio:
Host Marriott – ($3,112 /$3,822) = 1.23%
Marriott International – ($2,440 / $3,207) = 1.31%
(c) Calculate the return on assets and return on common stockholders’ equity ratios for each company.
Return on Assets: Host Marriott – (25)/3822= .0065
Marriott Intl – 200/3207= .0624
(d) The company’s debt holders were fiercely opposed to the original plan to split the two companies because the original plan had Host Marriott absorbing the majority of the company’s debt. They relented only when Marriott International agreed to absorb a larger share of the debt. Discuss the possible reasons the debt holders were opposed to the plan to split the company.
The debt holders were more than likely opposed the splitting of the company because they would not make a profit and would run the risk of being stuck with all of the debt. The debt holders felt the split was unfair since the debt resulted from business done as one company. In order to afford both companies a fair opportunity for success it’s only fair to assign a fair amount of debt between each